'Unprecedented times': Wakefield Council faces budget gap of almost £85m over the next five years

A stark financial report warns that the local authority is dealing with one of the most serious economic challenges it has ever faced.

Senior councillors are being advised that cuts must to be made to avoid the Council's financial stability being “jeopardised”.

The report, to be considered by Cabinet members at a meeting next week, says the expected budget gap for the period 2023/24 to 2027/28 is £84.9m.

Chief financial officer Neil Warren says the 'unprecedented' economic climate has been caused by rising interest rates, soaring inflation, energy price hikes and the war in Ukraine.

The financial challenge comes as Wakefield Council has to cope with a rise in demand for many of its key services, particularly adult and children’s social care services

Schools also face increasing pressure, with 12 of 55 schools across the district expected to end the financial year with a deficit.

The Medium Term Financial Strategy (MTFS) document adds: “The current and future financial environment for local authorities remains extremely challenging and maintaining a secure financial position is critical to enabling the Council to develop and implement budget plans in a managed way which minimises, as far as possible, the impact of funding cuts on the delivery of our priority services.

The report adds: “These are unprecedented times and the need for robust financial management has never been more important.”

“To be truly effective, financial planning needs to balance the immediate service needs and pressures against the long-term financial resilience and sustainability of the Council.”

It was reported last month that Wakefield Council is expected to overspend this year’s annual budget by more than £9m.That figure is now expected to rise to around £11m, partly due to a decision to extend free off-street car parking across the district.Some budget gaps have been plugged by the local authority using its reserves, which is essentially the Council’s savings account.

In March this year, reserves totalled £68.3m.

Further planned use of reserves could reduce this to £33.1m by March next year.

The report states: “The current financial position, coupled with the identified budget gap is not sustainable from current levels of reserves.

“Greater emphasis on financial accountability is needed with Corporate Directors leading financial management, exercising control, and determining priorities for their budget, working with their respective portfolio holder.

“The Council will continue to keep the MTFS under review given the high degree of uncertainty surrounding the potential impact of central Government policy and Government funding reforms in relation to local government.”

Cabinet members will consider the report at a meeting on Tuesday (October 11).

A further financial report will be prepared for a meeting in January.

The report ends: “In light of the financial challenges presented, budget growth will not be an option.”